Yellen highlights solid U.S. economy and soft landing prospects

Treasury Secretary Janet Yellen addressed concerns about the U.S. economy at the Texas Tribune Festival in Austin, emphasizing its strength despite recent weak job reports. She acknowledged a slowdown in job growth compared to the post-pandemic hiring surge but reassured that the economy is still recovering and operating near full employment. The Bureau of Labor Statistics reported a nonfarm payroll increase of 142,000 in August, falling short of expectations, which has raised fears of a recession and affected stock market performance. Yellen noted that while the unemployment rate decreased to 4.2%, the recent jobs data has sparked worries about the Federal Reserve's ability to achieve a "soft landing"—a scenario where inflation is controlled without triggering a recession. The Fed is anticipated to lower interest rates soon, which could help stabilize the economy. Yellen expressed optimism about the progress made in reducing inflation, describing it as a significant achievement. Despite the challenges, she stated, "I don't see red lights flashing," indicating her belief in the resilience of the economy. The comments come in the wake of a tumultuous week for the stock market, which experienced its worst performance since March 2023, largely due to fears surrounding the labor market's health. Yellen's remarks aimed to calm investor jitters and reinforce confidence in the ongoing economic recovery. Overall, Yellen's statements reflect a cautious yet hopeful outlook on the U.S. economy, highlighting the importance of monitoring employment trends while recognizing the strides made in inflation control. The administration's focus remains on navigating potential risks while fostering a stable economic environment.